a) Immediate, life or temporary income insurance
1. Immediate life annuity insurance
Regulations: Art. 25.3 a) 2 Law Income Tax
In the case of immediate life annuities, which have not been acquired by inheritance, legacy or any other succession title, the income from movable capital will be considered the result of applying the following percentages to each annuity based on the age of the annuitant at the time of the establishment of the annuity and which will remain constant throughout its validity:
| Age of the recipient | Applicable percentage |
|---|---|
| Under 40 years old | 40 percent |
| Between 40 and 49 years old | 35 percent |
| Between 50 and 59 years old | 28 per 100 |
| Between 60 and 65 years old | 24 per 100 |
| Between 66 and 69 years old | 20 per 100 |
| 70 years or older | 8 per 100 |
Note: In accordance with the fifth transitional provision of the Income Tax Law these percentages are applicable to benefits in the form of income received from January 1, 2007, even if the creation of the income occurred prior to said date.
The portion of income considered to be capital gains, by applying the corresponding percentage, is subject in 2020 to the withholding rate of 19%.
Note: It is understood that the income has been acquired by inheritance, legacy or any other succession title, when the acquisition of the same has been motivated by the death of the contractor, if the insurance is individual, or of the insured if the insurance is collective contracted by the company.
This same tax regime will be applicable to life annuities received from systematic individual savings plans that meet the requirements established in the Third Additional Provision of the Personal Income Tax Law, even in cases where the aforementioned systematic individual savings plans are the result of the transformation of certain life insurance contracts entered into prior to January 1, 2007 in which the contracting party, insured party or beneficiary is the taxpayer himself.
See the fourteenth transitional provision of the Personal Income Tax Law regarding the transformation of certain life insurance contracts into individual systematic savings plans. See also Additional Provision Five of the Personal Income Tax Regulations regarding the total or partial mobilization between individual systematic savings plans.
2. Immediate temporary income insurance
Regulations: Art. 25.3 a) 3 Law Income Tax
In the case of immediate temporary income, which has not been acquired by inheritance, legacy or any other title of succession, in the terms discussed in the previous section, the result of applying the following percentages to each annuity based on the duration of the income will be considered as income from movable capital:
| Duration of the rental | Applicable percentage |
|---|---|
| Less than or equal to 5 years | 12 per 100 |
| Greater than 5 and less than or equal to 10 years | 16 per 100 |
| Greater than 10 and less than or equal to 15 years | 20 per 100 |
| Over 15 years | 25 percent |
Note: In accordance with the fifth transitional provision of the Income Tax Law these percentages are applicable to benefits in the form of income received from January 1, 2007, even if the creation of the income occurred prior to said date.
The portion of income that is considered capital gains by applying the corresponding percentage will be subject to withholding tax.